7 ms·

> The 6 years he spent learning at another trading firm or the fact that on his own he probably had alot less risk oversight that allowed him to lever up more t

by qwrusz 10y ago

> The 6 years he spent learning at another trading firm or the fact that on his own he probably had alot less risk oversight that allowed him to lever up more than he would have in side of an investment house. Maybe neither? As good as this kid might be, hard to believe he did a 30x year! Even with more risk and there was some crazy volaility back then, a 30x year going from half a million pounds to 15 million in 12 months is very high. Never know of course. He might have done it. theoretically possible with the exotics CDS in that year. But also hard to trust journalists aren't just twisting facts these days. Another explanation for the rise: He already had several million while working at the firm, but they weren't in his name, not in a public filing anyway until went out on his own and took out the funds.

charlesdm 10y ago
If he did 30x a year, he must have been the best investor in the world?
- deleted 10y ago
  [deleted]
- btilly 10y ago
  No, it just means an insane beta and good luck. Anyone can set up the lottery to create an insane beta. And luck, well, you know how that goes.
- shoo 10y ago
  you can't judge skill from outcomes in the short run if a large component of the outcome is outside of the control of the operator see e.g. Taleb "fooled by randomness" there's also a good "winner's game" vs "loser's game" argument, see Ellis - The Loser's Game: http://www.cfapubs.org/doi/pdf/10.2469/faj.v51.n1.1865 http://www.cfapubs.org/doi/pdf/10.2469/faj.v51.n1.1865 (PDF)
MR4D 10y ago
A 30x return is easy - rare, but easy. Repeating it, however, is damn near impossible. Options trading, which he was good at, went haywire on that day. Anybody in a decent position with options made crazy returns. But their timing had to be good. If you bought a short-dated, just out of the money SPY put the day before, and sold it that afternoon, you made a killing as far as percentage return. The number of people who had that or similar trade probably numbers in the thousands. But the reason you don't hear about them is it was either to hedge a larger position, or a small speculative position, and making $50,000 doesn't make headlines.
- qwrusz 10y ago
  Firstly: this is just overall a ridiculously incorrect comment. Second: the 30x return discussed was back in 2008-2009. The flash crash you are talking about happened in 2010. Also the SPY moved down like -10% during the crash. Bro, come on.
  - chrisatumd 10y ago
    I just want to jump in and comment that 30x gains in a year are not really that crazy with out of the money close to expiration options. I've had 2 different years in the past with better than 30x gains (and years where my options account went to 0). If you had bought out of the money puts with a near term expiration for an index like SPY and it dropped 10%, you could be talking 80-1000 times return depending on how far out of the money and how close to expiration. Disclaimer: I do not recommend out of the money options trading for anything other than pure gambling on money you couldn't care less about losing.
    - qwrusz 10y ago
      Ok Hacker News, I think I am done for the day after this. Just to be clear, we are talking about a 30x return in someone's entire net worth, in 12 months, from trading. I didn't say you couldn't construct a perfect hypothetical trade that in hindsight would have earned someone a huge 30x or 100x return or whatever. Not sure how that's even relevant though (unless maybe you trade from home and buy those expensive mega-ultimate-dragon options trading online skype courses and still think such trades are even worth talking about). I didn't even say a 30x return of his net worth was impossible, I said it's "hard to believe" and "very high'. But apparently a 30x return "is easy" and this guy has done it twice... OK. Well it's been fun. HAGW everyone P.S. I appreciate chrisatumd's disclaimer, nice to see, and a good reminder that investing and trading is gambling and you can lose it all, whether you're an amateur or pro.
      - caminante 10y ago
        Man, I lost it at "A 30x return is easy - rare, but easy." Re: story, I've casually followed his story. I'm also very dubious of the allegations against him and claims about his performance.

by qwrusz 10y ago

charlesdm 10y ago

If he did 30x a year, he must have been the best investor in the world?

deleted 10y ago
[deleted]
btilly 10y ago
No, it just means an insane beta and good luck. Anyone can set up the lottery to create an insane beta. And luck, well, you know how that goes.
shoo 10y ago
you can't judge skill from outcomes in the short run if a large component of the outcome is outside of the control of the operator see e.g. Taleb "fooled by randomness" there's also a good "winner's game" vs "loser's game" argument, see Ellis - The Loser's Game: http://www.cfapubs.org/doi/pdf/10.2469/faj.v51.n1.1865 http://www.cfapubs.org/doi/pdf/10.2469/faj.v51.n1.1865 (PDF)

MR4D 10y ago

A 30x return is easy - rare, but easy. Repeating it, however, is damn near impossible. Options trading, which he was good at, went haywire on that day. Anybody in a decent position with options made crazy returns. But their timing had to be good. If you bought a short-dated, just out of the money SPY put the day before, and sold it that afternoon, you made a killing as far as percentage return. The number of people who had that or similar trade probably numbers in the thousands. But the reason you don't hear about them is it was either to hedge a larger position, or a small speculative position, and making $50,000 doesn't make headlines.

qwrusz 10y ago
Firstly: this is just overall a ridiculously incorrect comment. Second: the 30x return discussed was back in 2008-2009. The flash crash you are talking about happened in 2010. Also the SPY moved down like -10% during the crash. Bro, come on.
- chrisatumd 10y ago
  I just want to jump in and comment that 30x gains in a year are not really that crazy with out of the money close to expiration options. I've had 2 different years in the past with better than 30x gains (and years where my options account went to 0). If you had bought out of the money puts with a near term expiration for an index like SPY and it dropped 10%, you could be talking 80-1000 times return depending on how far out of the money and how close to expiration. Disclaimer: I do not recommend out of the money options trading for anything other than pure gambling on money you couldn't care less about losing.
  - qwrusz 10y ago
    Ok Hacker News, I think I am done for the day after this. Just to be clear, we are talking about a 30x return in someone's entire net worth, in 12 months, from trading. I didn't say you couldn't construct a perfect hypothetical trade that in hindsight would have earned someone a huge 30x or 100x return or whatever. Not sure how that's even relevant though (unless maybe you trade from home and buy those expensive mega-ultimate-dragon options trading online skype courses and still think such trades are even worth talking about). I didn't even say a 30x return of his net worth was impossible, I said it's "hard to believe" and "very high'. But apparently a 30x return "is easy" and this guy has done it twice... OK. Well it's been fun. HAGW everyone P.S. I appreciate chrisatumd's disclaimer, nice to see, and a good reminder that investing and trading is gambling and you can lose it all, whether you're an amateur or pro.
    - caminante 10y ago
      Man, I lost it at "A 30x return is easy - rare, but easy." Re: story, I've casually followed his story. I'm also very dubious of the allegations against him and claims about his performance.